Chr. Hansen Holding — M&A Activity 2016

Sep 13, 2016

Hoersholm, 2016-09-13 07:57 CEST (GLOBE NEWSWIRE) --

Company announcement no.13/2016

Chr. Hansen has today signed an agreement with Valio OY to acquire LGG®, the
world’s best documented probiotic strain, including trademarks and related
business for a cash consideration of EUR 73 million.

Lactobacillus rhamnosus GG (protected under the trademark LGG®) has been used
in food and dietary supplements since 1990, described in more than 800
scientific publications and studied in more than 200 clinical studies[1]. The
main indication areas are within gastrointestinal and immune response. In 2015,
the acquired business generated revenue of around EUR 9 million, including
royalty payments from Chr. Hansen Holding A/S.

Cees de Jong, CEO of Chr. Hansen Holding A/S

“One of the ambitions in our Nature’s No. 1 strategy is to expand our current
business within microbial solutions for human health. The LGG® strain is
together with our own probiotic strain BB-12® the best documented probiotic
strain in the world, and the acquisition allows us to capture the full
potential of the LGG® brand across markets for dietary supplements and infant
formula offerings, as well as pursuing new opportunities in dairy.”

Annikka Hurme, CEO of Valio OY

“An important element in the deal is closer co-operation between the two
companies’ world leading innovations teams, which will further strengthen the
impressive science backing LGG®.”

Strategic rationale

Chr. Hansen has been selling LGG® products for human dietary supplements and
infant formula under a license agreement with Valio OY for more than 10 years
and already produces the strain in-house at cGMP standards. By acquiring the
full rights to the strain, Chr. Hansen is strengthening its position in
probiotic solutions for human health and dairy with attractive opportunities to
fully leverage the potential of the LGG® brand both as a stand-alone product
and in combination with Chr. Hansen’s own strains such as the BB-12® strain.

As part of the agreement Chr. Hansen will take over a number of specialty
strains already in production and a bacterial collection of around 3,200
strains. In addition, Chr. Hansen and Valio will enter into a strategic R&D
collaboration to extract further value within dairy, including
commercialization of Valio’s transglutaminase enzyme technologies.

Financial impact

The acquisition will be funded by Chr. Hansen’s own cash and existing credit
facilities and is supportive of Chr. Hansen’s capital allocation priorities
according to which investments in organic growth and bolt-on acquisitions are
prioritized. Despite the acquisition, the Board of Directors will consider the
option for distributing excess cash during 2016/17, while maintaining financial
leverage consistent with a solid investment-grade credit profile.

The acquisition will contribute positively to Chr. Hansen’s EBIT b.s.i. in
2016/17, while not changing Chr. Hansen’s long-term financial ambitions, as
stated in the announcement of 12 April 2016.

Approximately EUR 2 million in non-recurring costs related to the transaction
will be recognized as special items in 2016/17.

Closing conditions

The acquisition of the LGG® business is subject to customary closing
conditions. Closing is expected during the fall of 2016.

About Chr. Hansen’s human health business

Demand for natural dietary supplement solutions that advance human health is on
the rise and the expected growth for microbial solutions in this industry is
7-9%. The human health business with revenue of approximately EUR 100 million
in 2014/15 is part of the Health & Nutrition business unit.

About the acquired business

The acquired business includes the LGG® trademarks and related royalties, a
collection of around 3,200 strains and a small production site in Tikkurila,
Finland, which currently produces the LGG® strain and a number of specialty
strains for cheese, etc.

For further information, please contact:

Anders Mohr Christensen, Senior Director, Investor Relations
Tel: +45 4574 7618

Klara Halkjaer, Head of Media Relations
Tel: +45 5339 2362

The announcement has been prepared in Danish and in English. In the event of
discrepancies, the Danish version prevails.

Forward-looking statements

This announcement contains forward-looking statements. Such statements are
subject to risks and uncertainties, as various factors, many of which are
beyond the control of Chr. Hansen Holding A/S, may cause actual developments
and results to differ materially from the expectations expressed in this
announcement.

About Chr. Hansen

Chr. Hansen is a global bioscience company that develops natural ingredient
solutions for the food, nutritional, pharmaceutical and agricultural
industries. The products include cultures, enzymes, probiotics and natural
colors, and all solutions are based on strong research and development
competencies coupled with significant technology investments. Revenue in the
2014/15 financial year was EUR 859 million. The company has more than 2,600
dedicated employees in 30 countries and main production facilities in Denmark,
France, USA and Germany. Chr. Hansen was founded in 1874 and is listed on
Nasdaq Copenhagen. For further information, please visit www.chr-hansen.com.

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[1] As of July 2015